The Memorandum and Articles of Association (MoA and AoA) are the governing documents of a company. They set out the company’s objectives, structure, and operations. The MoA and AoA are binding on the company and its members. This means that the company and its members must act in accordance with the provisions of the MoA and AoA.
What are the specific effects of the Memorandum and Articles of Association?
The MoA and AoA have a number of specific effects, including:
- They define the company’s name, registered office, and objects.
- They set out the company’s authorized share capital and the liability of its members.
- They establish the company’s management structure, including the board of directors and the shareholders.
- They set out the procedures for calling and conducting shareholder meetings, appointing and removing directors, and issuing shares and making dividends.
- They govern the winding up of the company.
What happens if a company acts in breach of its Memorandum and Articles of Association?
If a company acts in breach of its MoA and AoA, it may be liable to its members for damages. The company may also be liable to be wound up by the court.
MCQs on the effect of Memorandum and Articles of Association
- Which of the following is not an effect of the Memorandum and Articles of Association?
- They define the company’s name, registered office, and objects.
- They set out the company’s authorized share capital and the liability of its members.
- They establish the company’s management structure, including the board of directors and the shareholders.
- They set out the procedures for calling and conducting shareholder meetings, appointing and removing directors, and issuing shares and making dividends.
- They govern the winding up of the company.
The answer is (d). The MoA and AoA do not govern the winding up of the company. This is governed by the Companies Act.
- A company acts in breach of its Memorandum and Articles of Association. Which of the following is not a possible consequence?
- The company is liable to its members for damages.
- The company is liable to be wound up by the court.
- The company’s directors are liable to be removed from office.
- The company’s shareholders are liable to be held personally liable for the company’s debts.
The answer is (c). The shareholders of a company are not personally liable for the company’s debts, unless they have agreed to be so liable.
- A company’s Memorandum and Articles of Association are silent on a particular matter. How should the company act in this case?
The company should act in a way that is consistent with the spirit of the MoA and AoA. If there is no way to do this, the company should seek legal advice.